MSCI launches $1.275 billion term loan B at a discount of 99

By Sara Rosenberg

New York, April 12 - MSCI Inc. launched its $1.275 billion six-year term loan B on Monday with an original issue discount of 99, according to a market source.

Price talk on the term loan B and on the company's $100 million five-year revolver is Libor plus 350 basis points with a 1.5% Libor floor.

Morgan Stanley is the lead arranger and bookrunner on the $1.375 billion senior secured credit facility (Ba2/BB+). Credit Suisse is the syndication agent and Bank of America is the documentation agent.

Covenants include a minimum interest coverage ratio and a maximum total leverage ratio.

Amortization on the term loan is 1% annually, with the balance due at maturity.

The facility includes a $300 million accordion feature.

Proceeds will be used to help finance the acquisition of RiskMetrics Group Inc., to refinance existing senior secured credit facilities at MSCI and RiskMetrics and to fund the ongoing working capital needs of the company.

Net debt to 2009 adjusted EBITDA will be 3.6 times, and net debt to 2009 adjusted EBITDA plus run-rate synergies will be 3.1 times.

The company expects that it will generate very strong free cash flows, enabling it to delever rapidly in the next few years.

Under the agreement, MSCI is purchasing RiskMetrics in a cash and stock transaction valued at $21.75 per share based on MSCI's closing price of $29.98 per share on Feb. 26, or $1.55 billion.

The offer consists of $16.35 in cash and 0.1802 shares of MSCI per RiskMetrics share.

Other funding for the acquisition will come from $642 million of existing cash.

The combined company would have about $750 million of revenues and about $314 million of adjusted EBITDA.

Closing is expected in mid-to-late June.

The transaction is subject to approval of RiskMetrics shareholders, antitrust clearance and receipt of financing.

MSCI is a New York-based provider of investment decision support tools to investment institutions. RiskMetrics is a New York-based provider of risk management and corporate governance products and services to the financial community.

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